Competing More Effectively for Capital Through Effective Disclosure
The recent period has been extremely challenging for Chinese companies listed in the U.S. The group as a whole has been impacted by the global economic crisis, financial accounting scandals at various Chinese companies, and a host of short seller attacks that targeted difficult to understand or non-transparent Chinese businesses. Even the best-performing Chinese companies are having difficulty rebuilding investor trust and winning the intense competition for capital.
"...the most successful companies go well beyond what is legally required, providing transparency in their communication processes..."
With investor confidence in Chinese companies so badly shaken, how can these issuers attract shareholder interest and build confidence in their company as an investment? In a new white paper, FTI Consulting explores this question.
In our view, for these companies to succeed – to stand out from the pack, restore international investor confidence, and generate more acceptable valuations – they must enhance certain investor relations behavior and practices. Perhaps most importantly, they need to recognize and respond to the intense demand from the investment community for enhanced transparency and much more effective disclosure.
In short, the most successful companies go well beyond what is legally required, providing transparency in their communication processes, educating and informing the investment community, and providing accurate guidance that builds shareholder support for their investment proposition. There is no "one size fits all" solution and this is sometimes not an easy task. However, in today's environment it is most definitely one of the only things that will help a public company compete more effectively for capital.